Ian Hannam, the former JP Morgan Cazenove banker who was once one of the City's most feted financiers, has lost his appeal against a ruling that he committed market abuse.
The decision follows a year-long re-evaluation of the original 2012 verdict from by the Financial Services Authority, the then City regulator, which found that Hannam had sent two emails breaching insider trading rules.
In one email, Hannam revealed his client, Heritage Oil, had struck oil before the company had announced the discovery publicly, while a second discussed a potential bid for the company. Hannam was fined £450,000 – although that decision is still under review and he could now face a tougher sanction.
In dismissing Hannam's appeal on Wednesday, the upper tribunal of the tax and chancery chamber stated: "Mr Hannam's actions in sending both the September email and the October email constituted behaviour falling within section 5 118(3) of the Financial Services and Markets Act 2000. He was thereby engaged in market abuse. His actions were not in the proper course of the exercise of his employment ... The issue of the appropriate penalty to impose is to be dealt with on a later occasion".
Hannam's appeal had cited a defence that there were "reasonable grounds for [the regulator] to be satisfied that [he] believed ... that his behaviour did not constitute market abuse, or took all reasonable precautions and exercised all due diligence to avoid behaving in that way."
After receiving the decision, the financier added: "I am obviously disappointed that the tribunal has rejected the explanation as to why the two emails sent in the course of advising and assisting my client did not contravene the rules, but I do appreciate the full consideration that has been given to the issues. I am gratified that the tribunal has accepted that I was indeed acting only in the interests of my client and without any dishonest or ulterior motive".
The announcement completes Hannam's relegation down the City rankings, after he resigned as chairman of capital markets at JP Morgan in March 2012 to fight the case.
Once considered one of the Square Mile's star bankers, his reputation has taken a second knock following the dissipation of the commodity sector boom.
He is now perhaps best remembered for conceiving the disastrous acquisition of Indonesian mining rights by Bumi, a vehicle created by the banking scion Nat Rothschild, while Hannam also brought the Kazakh miner Kazakhmys to the London markets, only for the shares to subsequently slump and the company to drop out of the FTSE 100.
In its judgement, the tribunal also suggested that the FSA's successor, the Financial Conduct Authority, might look at refining its rules. It recommended: "The authority might give consideration to making mandatory the keeping of a record of when and how a person has been made subject to confidentiality obligations and of precisely what he has been told. This is particularly so in the case of inside information in the context of a potential bidder in a corporate transaction. With such a record, the task of investigating potential dealing based on inside information would be more straightforward than without one".
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